How Can the Building Industry Overcome its ‘Innovation Problem’?

Australian building and construction professionals recognise that something must change to help Australia build homes more quickly – and many of them have potential solutions. 

A report released in February by the Productivity Commission, titled “Housing construction productivity: Can we fix it?“, found the Australian residential construction sector is now completing about half as many homes per hour worked compared to 1995. 

At the Property Council of Australia’s National Housing Solutions Summit in Melbourne on Tuesday, 1 April, a panel featuring representatives from Building 4.0 CRC, Woods Bagot, Mirvac and the Productivity Commission spoke to the research and addressed the key issue of innovation within the construction sector. 

“We’ve got this supply problem that’s actually a cost problem and that’s actually a productivity problem. I would also go one step further and say it’s an innovation problem,” Building 4.0 CRC CEO Mathew Aitchison said during the panel.  

“We’re really not good at innovating in this industry and we haven’t seen much of it. We need a structural change to address that lack of innovation.” 

One approach proposed was standardising designs to accelerate home building. NSW is already working towards this by adding new designs to its fast-tracked home building pathway to boost low- and mid-rise housing development. 

Productivity Commission chair Danielle Wood said standardisation was a question that was “front of mind” for the commission when conducting the research.  

“I cannot think of any other sector where we’re building a unique product each time and that clearly must build in cost inefficiencies into the process,” she said. 

“That conversation needs to be had of a trade-off between every single house that’s going to look unique versus we’re going to be able to produce this stuff in a really efficient way. 

“We know from around the world, standardisation can look great when it’s done well.”  

From the perspective of Mirvac, who was represented by the CEO of residential, commercial and mixed use development, Stuart Penklis, one solution might be for builders to actually reduce the number of designs in its library.  

“The one leading thing from our perspective is scale and that’s why we’re focused on designing smartly, optimising and standardising [designs],” Mr Penklis said.  

“But then looking at both local and international supply chains to get that efficiency and the scale and volume of some of these producers are one of the avenues to really unlock this space, particularly in the middle ring.”

The CEO of architectural firm Woods Bagot, Sarah Kay, said Australia can take note from initiatives seen overseas such as DIY flats in Europe and Chile’s “half a house” project by architect Alejandro Aravena, which saw homes built with one side incomplete, allowing residents to expand and finish the other half themselves.  

“These completely de-spec a house and let the owner be able to put in their own Ikea kitchen or their own wardrobes into a space, rather than everything there on day one that only suits one type of buyer,” she said.  

The case for prefab 

Prefabrication and modular homes, which are built offsite and then transported and assembled at their final location, are increasingly signalled as an innovative solution for the sector. 

The panel discussed how prefab and modular construction can benefit the industry. Picture: Getty

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The federal government is supporting this initiative with a $49.3 million investment in programs to foster prefabricated construction, alongside a $4.7 million investment in a national certification process to streamline approvals, as part of the 2025 budget.  

Ms Kay encouraged gradual offsite construction adoption during the panel.    

“Every step along that way is a step in the right direction,” Ms Kay said.  

“Just building more offsite and knowing exactly what you’re going to build and minimising how much time it takes to put that kit of parts together onsite is the direction we should be moving in and not be scared of taking smaller steps.”  

Mr Aitchison pointed out a gap in the prefab industry for multi-storey buildings, especially in areas like Melbourne with little focus on middle-density developments.  

To bridge this divide, he advocated for a research and development corporation for the construction industry, akin to those seen in agriculture.  

“We have to face basic fact and that is the industry on its own, does not appear capable of self-generating the innovation we need to get out of this hole,” he said.  

“So having an RDC-like organisation is something we’re interested in promoting to the government.  

“It could help to do great case studies and building tests to show how we get these new technologies and processes onto middle ring suburbs and make them work because it’s really hard to do that under the pressure of time and money that everyone in this room feels.”  

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